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The Petrotrin aftermath

Black flags line the perimetre fence of Petrortrin's Trinmar operations in Port Fortin earlier today, following Prime Minister Dr Keith Rowley's announcement that the Petrotrin Pointe-a-Pierre refinery will be sold last night.

The closure of Petrotrin’s refinery will have a negative effect on surrounding businesses and communities.

Dr Roger Hosein, senior lecturer, University of the West Indies (UWI), came to this conclusion and is proposing that loan facilities be set up for people to start new businesses to help these communities.

He took data from the 2010 census and then looked at all the businesses in the frontline communities in Marabella, Claxton Bay, Gasparillo and for T&T as a whole and then calculated the population to business ratio.

“In some communities, for example, like Marabella and Gasparillo, because they are fence lined, they would take a big hit if it is the Petrotrin refinery were to close on the assumption that the population to business ratio is in Marabella and Gasparillo higher than anywhere else in the country.”

He also looked at data of Petrotrin’s employees of where people are employed and where they live and he then mapped it on to the various communities.

“What we found is that in some communities that are attached to some of Petrotrin’s areas you would have a significantly higher proportion of people working in state-owned enterprises.”

He said if he were the Government he would look at the example of the Mayaro Initiative for Private Enterprise Development (MIPED).

“This is a micro enterprise loan that bpTT set in Mayaro and it was set up with US$1. It offers small loans and, not just that, it also offered small loans with entrepreneurial training so that a dislodge worker or a community resident could have got entrepreneurial training and a loan in order to run a business so he or she could generate an income.”

He suggested two MIPED-type loan arrangements once the refinery is closed.

“If we are to go the route of closing the refinery I think we should consider, as part of the exit package, that Petrotrin form two MIPED-type loans—one in Gasparillo and one in between Claxton Bay and Mt Plaisance Park—to help stimulate economic activity in those communities. Of course, there must be well-defined criteria in order to access these loans.”

He also recommended: “We should try to get an eTech Park in Gasparillo that could absorb and create backward and forward linkages and probably on preferential terms for the Petrotrin employees.”

Hosein spoke last Friday at a seminar on Petrotrin’s future hosted by the American Chamber of Commerce, T&T at the Cipriani College of Labour and Co-operative Studies, Valsayn.

He gave a historical overview of T&T’s oil industry.

In 1974 the company currently called Petrotrin was taken over by the government and renamed as Trintoc—the Trinidad and Tobago Oil Company.

By the mid 1970s there was the oil boom and money started to flow into the economy.

“A certain Prime Minister then said that money is no problem. We took over the assets of BP and we took over the assets of Shell. Those two interventions came at the time of the oil boom.”

He then spoke about the first incarnation of the Petrotrin refinery.

“The state took over the Petrotrin refinery at a time when the refinery itself was becoming redundant. Indeed, one former Energy Minister Barry Barnes noted that Texaco had expanded the refinery in Trinidad after they took it over to be all things to all men. “

Fast forward to 2018 and Hosein said that T&T’s economy is still in a mess.

“We are not in the same position that we were in 1985 but we miraculously took our time and experienced the third oil boom and designed strategies and formulas to spend most of the money without coming out of a recession.”

He gave the view that since 2007 the economy has not grown.

“This economy is very stagnant and the prospects for medium-term growth is very, very weak.”

According to The International Monetary Fund (IMF) projection in July there will be one per cent growth for T&T.

“Before in the mid-term review they said two per cent and the IMF in 2017 had said 1.9 per cent. If we were to extrapolate this and take 2007 as a base year, in 2020 the economy is basically at the same point so we grew at 0.8 of a percentage point. That is after producing about 3.4 billion barrels of oil and gas equivalent, that has gone forever. The petroleum sector is 10 per cent smaller in size and the non-petroleum sector is only about seven per cent larger,” he said.

He added that the country squandered all the income it received from its energy boom and from 2007 and the country has not progressed.

He pointed out that in 2016 there were 61 state-owned companies and argued that they have now become burdensome to the economy.

“In 2007 state-owned enterprises’ debt as a per cent of total debt was 38.7 per cent and in 2016 it was 35.7 per cent. It was $7.2 billion in 2007 and $20.5 billion in 2016. I have two young kids and I do not want to be funding any state-owned enterprises. In fact I want money from them. Why should we transferring resources to state owned enterprises? I want commercially vibrant state owned enterprises using my resources to earn me money to help develop my country of which I should benefit in some way. I do not want personally to be subsidising any state-owned enterprise.”

He then went on to give figures on Petrotrin’s contribution to the economy.

“In 2009, Petrotrin brought in $17.7 billion in foreign exchange and by 2016 it was $3.5 billion. This was a dramatic and substantial decline in a short space of time.”

He said that whatever happens at Petrotrin will affect the rest of the economy.

“In fact, the GDP that was forecasted in the non energy sector could be minus 1.8 per cent this year, the closure of the refinery which I am guessing contributes about $2.4 billion in GDP would lead to an even further fall in the energy sector,” he concluded.